What does a highly volatile asset class offer traders beyond palpitations and the occasional heart attack? Opportunities.
Nicole Wirick, of Prosperity-Prosperity Strategies in Michigan, he summed it up for Forbes: “Market volatility is a normal part of investing and is to be expected in an investment portfolio. If the markets were going straight up, investing would be easy and we would all be rich.”
And during the decade of the Wall Street bull market, some participants who should know better seem to have forgotten as they have become accustomed to steadily increasing stock prices over a period of several years.
The CEO of JPMorgan Chase, Jamie Dimon, Whoever called Bitcoin a “scam” in 2017 said this week to the United States House of Representatives Financial Services Committee What: “My personal advice to people is: stay away from him.” However, at his own general meeting on May 18, he said the following: “Many of our customers ask, ‘Can we help them buy or sell cryptocurrencies? And we invest in them as we speak.”
Then, Why is the CEO of America’s largest bank investing in something that advises the rest of us not to touch?
Volatility is at the heart of this argument: it’s a classic case of “Do what I say, not what I do.” And Dimon and many like him in traditional financial markets make millions of dollars when the markets are rough.
Of course, no market is more hectic than cryptocurrencies.
In the past few weeks, volatility has returned to the cryptocurrency markets, pushing Bitcoin to $ 30,000 before the king of digital assets topped $ 40,000 again. And altcoins swung even more dramatically, a phenomenon that helped according to the quantitative algorithm of Cointelegraph Markets Pro, the VORTECS-Score, to deliver exceptional results in automated real-time tests.
The following graph, taken on May 28th, shows the performance results of the VORTECS ™ score since January 3rd of this year when the algorithm was activated. At the time of going to press, one day later, the return on investment of the best strategy is now over 3,000%.
In a score-based test scenario The algorithm “buys” a digital asset when the VORTECS ™ score exceeds a certain threshold (e.g. 80) and “sells” when it crosses a second threshold (e.g. 75).
Without the need to use sophisticated balancing techniques, just split the portfolio across all assets that currently require investment, The algorithm gained 3.037% for its best performing test strategy:: Buy at 80 and sell when the asset goes back over 80 on the downhill.
For comparison, Bitcoin has offered gains of just 11.2% since Jan 3rd, and an evenly weighted basket of the top 100 altcoins has returned 247%.
The only reason the VORTECS ™ score can make such big gains is because the cryptocurrency markets are volatile, offering multiple entry and exit options in a shorter period of time than the previous one traders enjoy in traditional markets.
This may be partly a function of the 24/7 nature of cryptocurrency trading, but also in part because the risk tolerance of cryptocurrency investors is generally seen as significantly higher than that of Wall Street CEOs … at least for short-term investments.
While volatility has obvious drawbacks, including the risk of permanent loss and total loss, it also has great upside potential for traders with strong research skills and tools.
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Cointelegraph is a financial information publisher and not an investment advisor. We do not offer any personalized or individual investment advice. Cryptocurrencies are volatile investments and carry significant risk, including the risk of permanent loss and total loss. Past performance is not an indication of future results. Illustrations and graphics are correct at the time of writing or where otherwise stated. Strategies tested live are not recommendations. Ask your financial advisor before making any financial decisions. Full terms and conditions.